{"about":{"site":"https://codewithpapers.app","non_affiliation":"Code with Papers and Syntology are not affiliated with, endorsed by, or sponsored by Papers with Code, Meta, or the pwc-archive mirror.","licence":"CC BY-SA 4.0","licence_url":"https://creativecommons.org/licenses/by-sa/4.0/legalcode","attribution":"https://codewithpapers.app/attribution","modified":"archive material modified by Syntology; see the attribution page"},"url":"/paper/are-bitcoin-bubbles-predictable-combining-a","title":"Are Bitcoin Bubbles Predictable? Combining a Generalized Metcalfe's Law and the LPPLS Model","arxiv_id":"1803.05663","date":"2018-03-15","proceeding":null,"authors":["Spencer Wheatley","Didier Sornette","Tobias Huber","Max Reppen","Robert N. Gantner"],"abstract":"We develop a strong diagnostic for bubbles and crashes in bitcoin, by\nanalyzing the coincidence (and its absence) of fundamental and technical\nindicators. Using a generalized Metcalfe's law based on network properties, a\nfundamental value is quantified and shown to be heavily exceeded, on at least\nfour occasions, by bubbles that grow and burst. In these bubbles, we detect a\nuniversal super-exponential unsustainable growth. We model this universal\npattern with the Log-Periodic Power Law Singularity (LPPLS) model, which\nparsimoniously captures diverse positive feedback phenomena, such as herding\nand imitation. The LPPLS model is shown to provide an ex-ante warning of market\ninstabilities, quantifying a high crash hazard and probabilistic bracket of the\ncrash time consistent with the actual corrections; although, as always, the\nprecise time and trigger (which straw breaks the camel's back) being exogenous\nand unpredictable. Looking forward, our analysis identifies a substantial but\nnot unprecedented overvaluation in the price of bitcoin, suggesting many months\nof volatile sideways bitcoin prices ahead (from the time of writing, March\n2018).","url_abs":"http://arxiv.org/abs/1803.05663v1","url_pdf":"http://arxiv.org/pdf/1803.05663v1.pdf","source":{"archive":"pwc-archive (Hugging Face), CC BY-SA 4.0","snapshot":"2025-07-28","licence_url":"https://creativecommons.org/licenses/by-sa/4.0/legalcode","row_kind":"abstracts"},"code_links":[{"paper_slug":"are-bitcoin-bubbles-predictable-combining-a","repo_url":"https://github.com/HiddenOrder/extended-NVT-model","is_official":0,"mentioned_in_paper":0,"mentioned_in_github":1,"framework":"none","reach":null}],"tasks":[{"task_slug":"diagnostic","task_name":"Diagnostic"}],"methods":[],"datasets_introduced":[],"methods_introduced":[],"results":[],"syntology":{"atlas_url":null,"mcp":null,"developers":"https://syntology.ai/developers"},"arxiv_metadata":null,"syntology_extracted_results":null}